Attwood Marshall Lawyers Wills and Estates Associate, Larisa Kapur, joins Robyn Hyland on Radio 4CRB to talk about legal obligations and moral obligations in the context of estate planning and drafting your Will. Your Will should reflect your personal wishes as to who you want to leave your estate to after you are gone. However, it is not uncommon for parents to play what they believe is the “fair” game when drafting a Will to try to avoid upsetting their children. Are you required to leave your estate equally to your kids?
Introduction
A Will should be structured in a way that reflects your personal wishes, not the expectations of those around you.
It is not uncommon for parents, or grandparents, to feel that they must leave their estate equally to their children or grandchildren in the name of “fairness” or to not be perceived as favouring a particular family member. It is important to not get caught up in the “guilt of giving” when writing your Will and understand that part of being a “reasonable testator” is to take into account the personal circumstances of your intended beneficiaries and the interplay with the value of the estate assets.
Although you are entitled to draft your Will and distribute your assets however you see fit, a balance must be struck between what you want to do with your assets, as well as ensuring you meet any moral obligation to provide for certain people following your passing. A Will-maker has a moral obligation to adequately provide for certain categories of people, such as a spouse or children, to ensure their general maintenance and advancement in life. But that moral obligation does not mean that you must distribute your assets using a set formula or equally between children, grandchildren, or other dependents. You get to decide who gets what and you should not feel guilty if that division is unequal.
Many people think they have a standard or legal obligation to leave their estate to their children in equal shares (including the share of a deceased child that should go to their offspring) and that if they don’t do this, whoever has received less can bring a claim against the estate. Legally, nothing could be further from the truth! In fact, not making adequate provision for a child who really needs it (and this includes adult children), is more likely to result in a claim against the estate.
For example, if you have 4 adult children and 3 of them are very well off. If the 4th adult child has a disability or simply ended up on the wrong side of being financially secure, you would be duty bound to leave the whole of your estate to the child in need, especially if you had a fairly modest estate. There may well be a legal obligation to provide for a roof over the 4th child’s head and a contingency fund to assist with living expenses.
Moral obligations vs legal obligations
Leaving an estate equally to be shared among children may seem like the fair or moral thing to do, however family situations are not so simple. In many instances, an uneven split of an estate may be more appropriate, or even leaving the entire estate to one child.
There are many factors to consider when deciding who gets what. These include:
- Family dynamics and the relationships between the children, other family members, and the Will-maker;
- The financial circumstances and needs of each child or dependent;
- Any contributions or sacrifices made by each child or dependent including if the children have supported the Will-maker by providing caregiver responsibilities, assistance in day-to-day life, or made other sacrifices to support the family;
- If the Will-maker has provided any financial support or significant gifts to any of their children or dependents during their lifetime;
- The personal circumstances of each child;
- Legal requirements to provide for certain family members;
- The value of the estate and how much is available to distribute to beneficiaries
Here we offer some scenarios to highlight when an uneven split of an estate may be appropriate.
Scenario 1
A mother of two children gifts her oldest child $100,000 to help that child purchase their first home. The mother has the intention of gifting the same sum of money to the second child come the time that child is ready to purchase a property. However, that child has no immediate plans to do so.
When drafting her Will, the mother chooses to acknowledge the financial gift she has given her oldest child during her lifetime. She makes an adjustment in her Will to give a greater share of her estate to her second child upon her death.
Scenario 2
A father has two children. He has a close relationship with his daughter and is estranged from his son who he has had no contact with for several years.
The father falls ill, and his daughter plays a key role in caring for him, including cutting back her time at work to allow her to be available to her father and to provide for him.
As the father’s health deteriorates, he executes a Will that leaves a greater share of his estate to his daughter to acknowledge the role she has played in caring for him, their strong relationship, and the sacrifices she has made financially to support him.
Scenario 3
A mother of two children maintains a positive and healthy relationship with both her children throughout her life.
Her oldest child has a successful job and owns their own home.
Her youngest child, however, suffers from a chronic medical condition that restricts his ability to work. For this reason, he maintains a level of financial dependency on his mother.
When drafting her Will, the mother chooses to leave an uneven share of her estate in favour of the youngest child to provide additional financial support to that child who has greater financial and medical needs.
These scenarios show just a few examples of when leaving an unequal split of an estate can be the most appropriate strategy. A Will-maker should consider their unique relationships as well as the needs of their children and other loved ones when completing their estate plan.
Following legal requirements to ensure your Will is valid
Simply writing your wishes on a piece of paper and stating that it is your last Will and testament is not enough to ensure the document is legally-binding. If you fail to follow the legal requirements to execute your Will, it is likely the document will be deemed invalid. If the Will is invalid, who you intended to receive your estate may not, with your estate likely being distributed according to the rules of intestacy.
For your Will to be considered legally-binding, you must follow the rules set out by each state and territory’s Succession Laws governing what makes a valid Will.
These include:
- Being over the age of 18-years old
- Revoking all previous Wills
- Having the testamentary capacity to make a Will. This means you must be of sound mind, understand the nature and consequences of making a Will, as well as the extent of the assets you own as well as the beneficiaries in the Will.
- The Will should be in writing. Ideally, the document should be typed, however, a handwritten Will may be considered valid if it follows all the legal requirements and is clearly written.
- The Will-maker must sign and date the document in the presence of two witnesses who also sign every page of the Will. The witnesses cannot be beneficiaries named in the Will.
When writing a Will, you must consider your legal obligations to provide for certain family members. You must also understand the difference between estate assets and non-estate assets. If you try to gift non-estate assets in your Will, such as jointly owned property or in most cases superannuation, these gifts will fail.
Although writing a Will may seem simple, overlooking any of the above legal requirements, or drafting a Will that is ambiguous and difficult to interpret, can leave behind an extremely costly and stressful situation for your loved ones to sort out.
The best approach to estate planning is to seek advice from an experienced estate planning lawyer who will ask you a series of fact-finding questions to understand your unique circumstances, the relationships you have with your family, to then identify the best way to structure your Will so that your wishes can be fulfilled.
This is even more important if you have a complex family structure or there are certain dynamics to navigate, and you are leaving your estate in unequal shares to the beneficiaries. A lawyer will be able to help you formulate the best strategy to ensure who you want to receive your assets, ultimately will, and to reduce the risk of other potential beneficiaries contesting your Will and claiming a larger portion of the estate that you did not want them to have.
If you are choosing to omit certain people from your Will due to estrangement or other factors, an estate planning lawyer will be able to advise you of the risks of doing so and look at what options are available to mitigate the risk of that person contesting the Will, including taking thorough file notes about your reasons for leaving the individual minimal benefits. In many cases signing a statement or a statutory declaration confirming your reasons for making no or different provision to your children may assist the executor to uphold the terms of your Will, but other than giving an insight into the thinking of the testator, they often have little probative value in determining the success or otherwise of the claim. This is purely at the discretion of the Court.
Attwood Marshall Lawyers – helping people plan for the future and preserve their wishes
At Attwood Marshall Lawyers, we understand that no two families are the same and everyone’s estate planning objectives are different. Writing a Will is an extremely personal task, and it is important to get the right advice to ensure that your wishes can be fulfilled, whilst also understanding any obligations to provide for your family.
An even distribution is not necessarily a fair one, and an experienced estate planning lawyer will be able to look at the unique relationships you hold with your family and the best way to ensure they are looked after when you are gone.
Our expert team of lawyers practice exclusively in Succession Law and estate planning. They offer their skills and experience to ensure our client’s wealth that they have built up over their life ends up with who they intend it to.
Please contact our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 to discuss your estate planning needs. We offer a free 30-minute estate planning review to help you understand what documents you may need to put in place.
Our lawyers are available at all our office locations at Coolangatta, Robina Town Centre, Southport, Kingscliff, Brisbane, Sydney and Melbourne. Book online instantly to make an appointment.
